Parent company of Tacoma’s St. Joseph hospital to pay millions over illegal charity care practices

SEATTLE —St. Joseph Medical Center in Tacoma and seven other CHI Franciscan hospitals will forgive as much as $20 million in debt, pay $2.22 million in refunds and rehab the credit of thousands of patients who qualified for charity care but didn't receive it, according to Attorney General Bob Ferguson.

Ferguson filed a lawsuit against St. Joseph in 2017, alleging that it illegally withheld charity care from tens of thousands of low-income patients.

Who was affected

In Washington, state law requires hospitals to make charity care accessible to patients whose income is at or below 200 percent of the federal poverty guidelines. Hospitals are required to:

Provide notice of the availability of charity care both verbally and in writing;

Only require patients to provide one income-related document to prove charity care eligibility.

St. Joseph demanded payment from patients up to three times before providing information about the availability of charity care or screening patients for charity care eligibility, Ferguson said. The hospital also required patients to provide several forms of income documentation to show they were eligible to receive assistance.

Conifer, St. Joseph’s revenue management contractor, trained staff to use language designed to give patients the impression that they were required to pay for their care upfront.

For example, former employees reported they were told to “never volunteer information about St. Joseph’s charity care program to patients, even if they were obviously low income or homeless.” A 2015 “user guide” from Conifer directed employees to “avoid phrases that give patients the option to not pay.”

A former employee told Attorney General’s Office investigators that she was trained to “encourage patients to pay the deposit by indicating that I could only provide them with a charity care application if they paid a deposit first.”

As early as 2014, St. Joseph senior management was aware of complaints about aggressive collection practices. The complaints included a patient who said that St. Joseph’s demand for a large upfront payment made him reconsider whether to have heart surgery.

Another complaint came from one of St. Joseph’s own employees, who had difficulty accessing charity care for her own medical bills.

The employee was assured her accounts were on hold while her charity care application was being processed, but then was served with a debt collection lawsuit over the accounts.

“This is terrible news from a very credible employee,” a senior VP wrote when forwarding the September 2014 email, adding that the labor union representing some St. Joseph employees had relayed similar complaints. She noted the union “is telling us it happens on a regular basis.”

One of the recipients, St. Joseph’s chief financial officer, commented, “we probably need to shore up our processes. I’m afraid this is going to backfire on us if we are not very careful very soon.”

Parent company's response

Cary Evans, vice president for communications and government affairs for CHI Franciscan, St. Joseph's parent company, released the following statement in response to Ferguson's announcement:

“As a non-profit, charitable organization our mission emphasizes human dignity and social justice. Last year, we cared for 2.7 million patients and saw 324,611 emergency visits. We provided $25 million in charity in 2018 alone. Neither the AG, nor our records, indicate any patient who applied for charity care was ever denied if they qualified. Out of an abundance of caution, we are exceeding the requirements of state law and providing charity compensation to patients who may be in most need, even if they never applied for charity care or did not actually qualify at the time of service.”

Evans said the settlement centers around a five-year period, from 2012-2017. CHI Franciscan provided $116,756,683 in direct charity care during that time frame.

Resolution

As a result of Ferguson's lawsuit, CHI Franciscan has agreed to reform its charity care practices across all eight of its acute care hospitals. Ferguson's office sued St. Joseph Medical Center, but the resolution involves charity care reforms and restitution for the following hospitals: St. Elizabeth Hospital, St. Francis Hospital, St. Anthony Hospital, St. Clare Hospital, St. Joseph Medical Center, Harrison Medical Center and Highline Medical Center.

“Medical debt is one of the leading reasons why families get trapped in poverty,” Ferguson said. "Hospitals are required to inform low-income patients about the availability of charity care. St. Joseph failed to live up to its duty, and imposed obstacles on vulnerable Washingtonians trying to access affordable care. Today’s resolution rights a wrong committed against thousands of patients across Washington.”

So far, at least 5,451 patients have been identified who will receive automatic refunds totaling $2.22 million. In addition, the Attorney General’s Office anticipates that several thousand patients will receive automatic debt relief, totaling as much as $20 million.

All patients who received care at any of the eight hospitals between 2012 and 2017 will have the opportunity to receive relief.

All uninsured patients -- likely tens of thousands of patients statewide -- will receive an attestation form in the mail to apply for relief. Patients should complete the attestation that their income was at or below 200 percent of the federal income level at the time of treatment. Eligible patients will receive a refund or discharge of their medical bills.

In addition to the blanket notification to uninsured patients, a third party is reviewing uninsured patient financial accounts for automatic relief.

The Sisters of St. Francis of Philadelphia founded St. Joseph Hospital in 1891. According to St. Joseph’s website, the sisters “ministered to all people, regardless of race, religion or financial status.” The hospital’s stated vision is to “lead the transformation of healthcare to achieve optimal health and wellbeing for the individuals and communities we serve, especially those who are poor and vulnerable.”

In addition to relief for consumers, today’s agreement also requires the eight hospitals to not only comply with Washington’s charity care law, but to go above and beyond for the next five years, providing charity care to patients with an income up to 300 percent of the federal poverty level.